Xeris Biopharma Holdings, Inc.

Hello and welcome to the Xeris Biopharma fourth quarter and year end 2022 conference call. My name is Alex. I'll be coordinating the call today. If you'd like to ask a question at the end of the presentation, you can press star one on your telephone keypad. If you'd like to withdraw your question, you may press star two. I'll now hand over to your host, Alison Way, Senior Vice President of Investor Relations and Corporate Communications. Please go ahead.

Thank you, Alex. Good morning and welcome to Xeris' fourth quarter and full year 2022 financial results conference call and webcast. A press release with the company's financial results was issued earlier this morning and can be found on our website. We are joined this morning by Paul Edith, Chairman and CEO, and Steve Piper, CFO. Paul will provide opening remarks, Steve will provide details on our financial results, and after a few closing remarks by Paul, we will open the call for Q&A. Before we begin, I would like to remind you that this call will contain forward-looking statements which may include, but are not limited to, statements concerning our business practices, future expectations, plans, prospects, clinical approvals, commercialization, corporate strategy, and performance, which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results made different materially from those indicated by the forward-looking statements made during this call as a result of various factors, including our financial position and need for financing, including to fund our product development programs or commercialization efforts. Whether our products will achieve and maintain market acceptance, our reliance on third-party suppliers, including single-source suppliers, our reliance on third parties to conduct clinical trials, the ability of our product candidates to complete successfully with existing and new drugs, the effect of uncertainties related to the impact of COVID-19 on our business operations and clinical activities, and our collaborators' ability to protect our intellectual property and proprietary technology, as well as other risk factors set forth in our filings with the Securities and Exchange Commission. Any forward-looking statements in this call represent our views only as of the date of this call and should not be relied upon as representing our views as of any subsequent date. Subject to obligations under applicable law, we disclaim any obligations to update such statements. I'll now turn the call over to Paul.

Thank you, Alison. Good morning, everyone, and thank you for joining us today. Before highlighting our achievements for the quarter and full year, I want to reiterate what we are building at Xeris. Everyone at Xeris is intensely focused on building a substantial patient-centric, commercially-focused, self-sustaining biopharmaceutical enterprise with multiple products in multiple therapeutic areas, a highly targeted development pipeline that has significant long-term promise, and increasingly value-added technology partnerships. What you will hear today is we are continuing to progress very successfully on that journey. We are executing our vision. On to our key highlights. We ended 2022 with another record-breaking quarter and full year, delivering net product revenue growth of 52% and 38%, respectively, on a pro forma basis. We finished the year with $110 million in total revenue and more than $120 million in cash on hand. Steve will provide more specific details on all of that. We also advanced our levothyroxine pipeline program added another high-profile and potentially very valuable Zeraject program with Horizon, and prudently managed expenses and cash utilization. Our momentum carries into 2023 and sets the stage for what I believe will be the most meaningful period in our company's history, achieving cash flow breakeven in the fourth quarter without the need for additional capital to fund our operations. I'll break down these achievements by product and program, starting with GVOC. GVOC had another record quarter and year in terms of net revenue and prescriptions. $15 million in net revenue, a 36% increase compared to the fourth quarter of 2021, and an 8% increase from the third quarter of 2022. For the full year of 2022, GVOC net revenues increased 35% compared to 2021, Total prescriptions for the fourth quarter were over 41,000, growing more than 42% compared to the same period last year. GVOTE total prescriptions for the full year were over 145,000, growing approximately 54% compared to 2021. The total glucagon market also grew 6% in the fourth quarter versus fourth quarter 2021, For the full year 2022, the total glucagon market grew 9% versus 2021. And so far in January of 2023, market growth is back to double digits, with GVOC continuing to outpace and drive market growth. At the end of February, GVOC's market share of new prescriptions in the glucagon market grew to approximately 28%. Ready-to-use glucagon products now represent almost 75% of the total new prescription market for rescue glucagon. While more and more patients on insulin are getting a ready-to-use glucagon, such as GVOC, there are still over 7 million who remain at high risk and don't have a ready-to-use GVOC available, just in case. To address this critical situation and motivate healthcare professionals, to do more. The ADA and Endo Society and other groups have recently updated their guidelines and include an important focus on the incorporation of ready-to-use glucagon into clinical practice. For example, the Endo Society expanded the definition of those at high risk for a severe low and strongly recommends that ready-to-use glucagon should be prescribed for all patients with diabetes, excuse me, on insulin or sulfonylureas, confirming what we've been saying all along. Moving on to Cabeas. Cabeas also had a record quarter and year, approximately $14 million for the quarter and just over $49 million for the full year, which represent increases of 33% and 23%, respectively, on a pro forma basis. To date, in 2023, we have not experienced negative impact on Cabeas from the first generic entry. That isn't to say there won't be an impact. However, this is a challenging marketplace that requires significant work to identify patients and initiate therapy. We have yet to see how the generics may impact that process and the market as a whole. We will see how it plays out over the course of the year. That said, Given the market dynamics historically, we are continuing to invest in Cabeas. Despite the entrance of a generic, and we believe we can maintain a considerable portion of the business we've worked so hard to build on behalf of the PPP community. On to Recorlove. Recorlove generating $3.8 million in net revenue for the fourth quarter, an increase of 51% from the third quarter. Total 2022 revenue for RecordLab was 7.4 million. And that's only in about three quarters of patient referrals and initiations with minimal dose titration. This is totally in line with our expectations for the early stages of the launch. Referral and initiation of therapy in Cushing's is a very deliberate process. And since launch in mid first quarter of last year, we have steadily grown the number of patient referrals to RecordLab and we are continuing to steadily increase the number of patients started on therapy. We are also starting to see many of those patients that started on therapy last year begin to slowly titrate up their average daily dose. It's still very early in the launch, but Recorlove continues to grow nicely and continues to show great long-term growth potential. Turning to our pipeline. and our partner programs using our unique Xerosol and Xeroject technologies. For our internal development and eventual commercialization, our focus is on advancing the levothyroxine program. This program is the development of our small volume, ready-to-use, once weekly liquid formulation of levothyroxine for subcutaneous injection using our Xerosol technology. As you will recall, last fall we reported positive top line results from the phase one pharmacokinetic comparison of oral Synthroid versus subcutaneous XP8121 in healthy volunteers. As we discussed at the time, all of the data from that phase one study were then combined to develop a population pharmacokinetic model. That model allowed us to perform simulations of various chronic dosing scenarios. Based on comparable exposure at steady state, the model estimated that 1,200 micrograms of once-weekly XP8121 could provide similar exposure to 300 micrograms of daily oral Synthroid, implying a 4X conversion factor between once-daily and once-weekly. We presented these data at a Type C meeting with the FDA at the end of last year. Based on the FDA's feedback, We will now initiate a phase two study in subjects currently taking oral thyroid replacement therapy to continue the dose conversion to once weekly, to confirm, excuse me, to confirm the dose conversion to once weekly XP8121. We expect to begin that study by mid 2023. Data from this phase two study will then inform our proposal to the FDA for a pivotal phase three program. Oral levothyroxine has been the standard of care for treatment of hypothyroidism for many years, and it continues, and it is one of the most prescribed medicines in the United States, generating more than 100 million prescriptions per year. However, 49% of patients have some GI issue or comorbid GI condition impacting oral absorption. Twenty-one percent take concomitant medications that could interfere with absorption. And 17 percent of patients admit to compliance issues with the daily oral regimen, and many of whom may or may not be the same patient experiencing multiple issues. If we assume conservatively that 62 million weekly doses per year is the addressable opportunity in that population that's having difficulties with the oral dosage, At today's branded Synthroid cost, which is approximately $35 to $50 per weekly dose, that would equal a potential $2.2 to $3 billion market segment that would be our target opportunity, a very substantial opportunity for a once-weekly drug. In November, we announced a collaboration and option agreement with Horizon Therapeutics to use our proprietary formulation technology, Zeraject, to develop an ultra-concentrated, ready-to-use, subcutaneous, injectable version of Tepeza. Upon successful completion of the formulation development, Horizon will have an option to license the Xeris delivery technology for further clinical development and commercialization of Tepeza. You may know that Tepeza is the first and only medicine approved in the U.S., approved by the US Food and Drug Administration, or FDA, for the treatment of thyroid eye disease, which is a serious, progressive, and potentially vision-threatening rare autoimmune disease. TPEZA, in its IV form, generated net sales of almost $2 billion worldwide in 2022. To engage in the project to develop a subcutaneous form, We received an upfront payment from Horizon of $2.75 million in the fourth quarter and will be entitled to receive a payment of $6 million on successful achievement of the target formulation. If the commercial option is then exercised by Horizon, Xeris would also be entitled to future development, regulatory, and sales-based milestones and royalties based on future sales. Moving on to our outlook for 2023. As I said at the start of this call, I believe this is a pivotal year for Xeris as we build on our 2022 momentum, achieve cash flow breakeven in the fourth quarter, and do that without the need for additional capital to fund operations. We are positioned for continued growth and are providing the following 2023 guidance. We believe we can deliver total revenues of between $135 million and $165 million in 2023. This includes net product revenue from current commercial products and other revenue from existing and potentially new technology collaborations. The midpoint of this range implies approximately 36 percent growth from 2022. We expect the rate of cash utilization in 2023 to be significantly less than 2022. In 2023, we expect that to be in the range of $57 million to $77 million, with the first quarter being the highest and improving considerably by the second half of the year, driven by our projected revenue growth and by aggressive cash management. We expect year-end cash, cash equivalents, and short-term investments of between $45 million and $65 million. This guidance should give you confidence that our business is self-sustainable beyond 2023. I'll turn the call to Steve for additional details of our 2022 performance and our 2023 guidance.